Wednesday, December 9, 2015

Not As Good as Advertised: Losses For Former Oil Guru Andy Hall Deepen

In trading it is crucial to retain agility of mind and enough self-awareness to understand you are dealing with forces greater than yourself, puny human.
When you start screaming into the wind that the market is wrong, you've lost. The market is what it is.

Front month futures $37.26 down 25 cents after trading as high as $38.99. Volume is quite large, 570,168 January contracts.

Astenbeck Capital Management LLC, a hedge-fund firm run by oil trader Andrew Hall, lost 9.7% in November, bringing 2015 losses to more than 26%, according to an investor letter reviewed by The Wall Street Journal.

Astenbeck’s assets under management fell to $2.4 billion, down from $3 billion at the start of the year and nearly $5 billion less than three years ago.

The fund is on track for its worst year since its inception in 2008.

Mr. Hall has remained bullish on oil throughout the deep downturn in the crude market this year and last.

In a letter to clients dated Dec. 1, Mr. Hall showed no sign of altering his views on the market. Throughout crude’s 30% fall this year, he has continued to cite data points that suggest a turnaround in prices soon.

Oil companies’ hedges, used to lock in prices, are beginning to expire, Mr. Hall noted in his letter. By next year, most companies will be fully exposed to low prices, with oil futures trading at nearly seven-year lows and the U.S. benchmark contract around $37 a barrel on Tuesday.

”The longer term story regarding oil remains very much intact,” Mr. Hall wrote. “Indeed the longer prices remain at current levels, the more powerful the ultimate recovery will likely be. The oil industry simply cannot function with oil prices stuck at current levels.

”Now is not the time to exit the market,” Mr. Hall added.

A representative for the firm didn't respond to a request for comment.

That of course raises the question: "When was the time to exit the market?"